Crypto-critics may be right. Thank you Theodore

Ninety per cent of everything is crap. Exactly! That is what makes the ten per cent worth it all!

It is easy to dismiss, avert or blindside someone who opposes you. But easy, eh! That’s what cowards or con-men do. Real men/women accept their truth, warts and all. If the world of regulations is going too far on Sturgeon’s law (you know that American author Theodore Sturgeon who told us that ninety per cent of everything is crud), it would be refreshing if we could confront the ninety per cent that is iffy, and also, with the same confidence, show the ten per cent that is The Real McCoy.

Here’s Nischal Shetty, CEO, WazirX rock-climbing his way against a huge, hard and caltrop-strewn wall that has grown even taller after some recent government reports and regulatory hesitation in India. Let’s light a torch and confront some horrors that haunt a lot of critics even now.

Why do you think some governments are against crypto and that too, so strongly?

It’s primarily due to lack of information and understanding about crypto-currencies. The recent report by the Inter-Ministerial Committee (IMC) is ﬂawed, and not well-researched. Blockchain is a nascent technology, and the Indian government needs to involve the crypto industry of India in understanding it, and follow the lead of developed nations like Japan, and the US.

Banning is not a solution.

What plausible arguments can the industry oﬀer to address such concerns? More so when the regulators could be right in pointing out the security loopholes dappled all over in this new world?

Every new technology has its pros and cons, and let’s not forget that blockchain is a very nascent technology. This is why it needs regulation and not a ban.

How? Any examples we can emulate?

We need strict guidelines for Initial Coin Offerings (ICOs) to protect consumer interests just like there are laws for stock investments. I also admire what Japan has done to regulate crypto, and India could learn a thing or two from them. For example, from April 2020, Japanese crypto-currency exchanges will have to manage user’s money separately from their own cash ﬂow and involve a third-party (auditor) for the same. That’s a good thing. Know Your Customer (KYC) and Anti-Money Laundering (AML) policies will help prevent misuse of crypto.

What is your reckoning of the ‘Banning Of Cryptocurrency & Regulation Of Oﬀicial Digital Currency Bill, 2019’ in India? What should the government also consider, in addition to what it has?

I strongly believe that the draft recommendation is fundamentally ﬂawed, and doesn’t understand crypto principles. Here are some key points:

A team of non-technologists made this report, and no industry experts were consulted during the process.

The committee has highlighted Crypto’s use as a ‘currency’ but left its other use cases like asset, security and utility.

India isn’t comfortable with crypto being used as a currency and that’s understandable. But not realizing the fact that maximum crypto activity in India is in the domain of asset and utility is a grave error that the IMC report has made.

They talk about promoting Distributed Ledge Technology (DLT) but banning crypto. That’s like saying we want internet but no websites.

The FATF laid some guidelines at the recent G20 summit which suggests that crypto-currency is not a threat to the economy. You look around, developed countries like USA, UK, Switzerland, Japan, New Zealand, and more, taking steps to understand and regulate crypto-currencies. I hope that India learns from these progressive countries.

Mintettes instead of miners – would this be true blockchain in the ‘Digital Rupee’ paradigm?

All said and done, Central Bank Digital Currency (CBDC) will solve a diﬀerent problem compared to what existing crypto assets solve. We shouldn’t look at these in isolation. Every kind of crypto can co-exist as each has a diﬀerent use case. Take the example of websites. The government having its own website does not mean citizens cannot create their own websites as well.

Are there any parts of the interim report/proposed Bill that are encouraging like allowing research in crypto, or making room for DLT apps in ﬁnancial sector?

There will be no research if you ban crypto and threaten to put people in jail.

The bill cannot possibly be banning and encouraging technology at the same time. This shows how ﬂawed the draft bill is and it needs to be changed by working closely with the crypto industry of India.

What is your take on the recent FATF rules that emerged at G20?

Those rules are good but hard to implement. However, it’s going in the right direction. I’m sure the Financial Action Task Force (FATF) will work towards updating the rules as it better understands some of the implementation challenges. The positive thing is that FATF wants to regulate and not ban. This is exactly the approach India should be taking as well.

Nischal Shetty, WazirX

How are players in India – like you- gearing up for what happens if the proposals go through and crypto is actually criminalised here?

This recommendation has brought us to a very crucial point in the crypto revolution. The entire industry including exchanges, lawyers, traders and inﬂuencers have come together so that this draconian proposal is not accepted by the government. I’m optimistic that the government will listen to us, and positively regulate crypto in India.

Moreover , WazirX is an international exchange registered outside India, and will continue to operate. Holding crypto on WazirX is similar to holding crypto on any other international exchange. The eﬀect of India-speciﬁc regulations on WazirX will be the same as on any other international exchange.

Your word to people who have invested in or are excited about crypto?

If you believe in crypto, hold crypto, or work in the industry — the time to act is now! Here’s how we can make our voice heard: • Tweet to the government about positive aspects of crypto using #IndiaWantsCrypto and tag our ministers. Write on publications, your own blog, upload youtube videos pointing out the ﬂaws in the IMC report. • Write physical letters to your local MP’s, our Finance Minister, and Prime Minister explaining why this IMC report is ﬂawed. • If we, the people of India, don’t act now, then our country will lag behind, and we will lose the opportunity to participate in this new and open ﬁnancial world.

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